International Petroleum Corp (IPCFF) Q3 2026 Earnings Call Highlights: Blackrod Ramp-Up Drives ...

Positive Points

• Q3 production of 44,000 boe/d was in line with guidance, and full-year 2026 guidance of 44,000-47,000 boe/d is maintained.

• Blackrod Phase 1 delivered ahead of schedule and on budget, with current production exceeding 10,000 bbl/d and plateau of 30,000 bbl/d expected by end-2027.

• Strong operating cash flow of $79 million in Q3 and free cash flow of $27 million, with full-year OCF guidance of $275-350 million and FCF of $35-110 million.

• Net debt reduced to $473 million with leverage below 1.8x and access to over $200 million in liquidity; non-core asset sale generated a net gain of CAD 62 million.

• Share buybacks continued with 1.3 million shares repurchased, and since 2017, 78 million shares repurchased at an average price well below current levels, creating over $1.3 billion in value.

Negative Points

• Q3 operating costs per unit were $21/boe, above the full-year guidance range of $18-20/boe, due to workovers in Malaysia and higher unit costs at Blackrod.

• Capital expenditure guidance increased to $185 million for 2026, up from $163 million, primarily due to additional projects in Canada.

• Gas prices remain relatively weak, impacting revenue from gas production.

• The company has limited direct oil price hedges and remains unhedged on benchmark oil prices, exposing cash flow to price volatility.

• M&A efforts have been active but unsuccessful so far, with no acquisitions completed despite participation in several processes.

Q & A Highlights

Q: With Blackrod production now exceeding 10,000 barrels per day, how is well performance tracking against initial expectations, what are the main risks to reaching the 30,000 barrel plateau by end-2027, and what milestones are needed before moving forward with Phase 2? A: CEO William Lundin said well performance has been "fantastic," with each well pair contributing in line with, if not slightly ahead of, its type curve estimates, crediting extensive delineation and pilot testing before the commercial decision. He sees no major risk to the 30,000 barrel per day plateau beyond standard oilfield ramp-up risks, noting the facility is designed for 30,000 barrels of oil and 90,000 barrels of steam per day. On Phase 2, IPC is conducting early engineering studies for a debottlenecking expansion and holds optionality for an entirely new central processing facility; a future phase expansion decision would come at the earliest in early 2028, subject to production ramp-up, cash flow, commodity prices and balance sheet strength.

Q: How is IPC assessing M&A opportunities in the current market, and would it prioritize existing core regions or consider new geographies? A: CEO William Lundin said M&A is "in our DNA" and IPC is opportunistic with no geographical sandbox restrictions, focusing on accretive acquisitions that maximize shareholder value. He noted IPC is already very long on resource with over 1.2 billion barrels of contingent resource, mostly at Blackrod, so it will not do a deal for the sake of doing one. IPC has been active in several processes in Canada and Southeast Asia this year without a successful outcome, amid a very active M&A landscape including the Headwater/Tamarack Valley combination, BlueNord's sale to Var Energi, Capricorn's sale to DNO and Cenovus's acquisition of MEG Energy. He highlighted the scarcity of sizable new major oil sands assets and called Blackrod a cornerstone growth element of the portfolio.

Q: Given elevated oil prices and potential future Blackrod investments, will IPC consider putting on benchmark oil price hedges beyond the differential hedges? A: CFO Christophe Nerguararian said the topic is being discussed internally, but IPC has decided not to hedge benchmark oil prices because it has no significant debt maturities into 2027 and expects a limited CapEx program immediately in 2027. He said the company closely follows the backwardation of the oil curve and may consider hedging if really good opportunities arise, but the stated policy is clear: absent significant debt maturities or significant CapEx, IPC will not hedge benchmark oil prices.

Q: How does IPC prioritize its capital allocation between organic growth, shareholder returns and M&A? A: CFO Christophe Nerguararian said IPC is inflecting to a period of much higher free cash flow generation now that Blackrod has been successfully built out, giving it good optionality across organic growth, shareholder returns and M&A. He said these strategic pillars are constantly reviewed to strike the best balance subject to market conditions and maximize value, and that IPC is not strict with its shareholder return framework. With climbing production, further growth optionality and shareholder returns reinitiated this year, he said IPC feels poised to "really do it all."

Q: What were the details of the Mooney asset sale, including booked reserves and the valuation achieved? A: CEO William Lundin said Mooney was a non-core asset with around 4 million barrels of 2P reserves assigned, translating to roughly USD12 per barrel in sale proceeds, which he described as quite accretive relative to the rest of the portfolio's 2P valuation. The non-core disposal generated gross proceeds of CAD70 million and a net book gain of CAD62 million (USD45 million), with an effective date in May and closing at the beginning of August. He noted Mooney had minimal book value when assigned upon the BlackPearl combination and delivered around USD30 million in free cash flow since 2019.

Q: How should we think about the production impact of the incremental 2026 CapEx, and what is the expected exit rate production for this year? A: CEO William Lundin said the added capital including the Brooks four-well campaign in Southern Alberta, Onion Lake Thermal infills and the completed France program is mostly back-end weighted, with production contributions running into 2027. On exit rates, he declined to give specific guidance given the wide range but said IPC expects to be in excess of 50,000 barrels of oil equivalent per day exiting this year, largely driven by Blackrod.

Q: Should investors think of IPC as a net buyer or net seller over the next few years, and are there any regions that should be ruled out for potential expansion? A: CEO William Lundin declined to categorize IPC as either a net buyer or seller, saying the company remains steadfast in maximizing shareholder value and is opportunistic at its core in a volatile industry. He described IPC as "ruthless capital allocators" that will closely examine complementary assets or companies that come to market, provided any acquisition is accretive or truly transformational. On dispositions, he said IPC is not running any active sales processes, and he ruled out no regions for potential expansion.

Q: Has AI changed the way IPC works in terms of well optimization and drill programs, and could it have a material impact on the business? A: CEO William Lundin said IPC characterizes itself as a "fast follower" rather than an early-stage technology adopter, but it is partaking in AI platforms that drive efficiency in day-to-day business activity, including data management and data interrogation applied to drilling and its assets. He said this is under review and being looked into, and that as AI continues to evolve it will undoubtedly bring additional efficiency to the business all around.

Q: What drove the higher unit operating costs in Q3, and how should OpEx trend going forward? A: CFO Christophe Nerguararian said Q3 unit OpEx of $21 per barrel was slightly higher due to workovers in Malaysia and fixed cost elements at Blackrod as first production came on stream, making early barrels more expensive on a unit basis. He said costs are expected to trend lower into Q4 and continue reducing into 2027, with full-year 2026 OpEx guidance maintained at $18 to $20 per barrel of oil equivalent.

Q: What is the outlook for liquidity and leverage following the Q3 results? A: CFO Christophe Nerguararian said net debt fell to USD473 million at the end

For the complete transcript of the earnings call, please refer to the full earnings call transcript .